By: Michael P. Sams, Esq. and Joshua D. Klebanoff, Esq.

Suffolk Construction’s 43 floor mixed use project in the Magic City was anything but after the United States District Court for the Southern District of Florida recently found Suffolk Construction’s inability to manage the “flow” of the project as general contractor so egregious that it constituted “active interference” with a subcontractor’s performance.  The Court then held that as a result, Suffolk was unable to enforce a “No-Damages-For-Delay” Clause in its subcontract and ordered to pay $4.1 million in damages.[1]

Massachusetts Courts do not always enforce no damages for delay clauses.  In Central Ceilings, Inc. v. Suffolk Construction Company, Inc., the Massachusetts Appeals Court also rejected Suffolk Construction’s enforcement of a no damages for delay clause.[2]  In that case, Suffolk was denied the clause’s protections because it refused to grant its sub any time extensions, demanding instead additional labor be provided to meet the project’s deadline.  The Appeals Court held that “we see no basis for disturbing the judge’s resulting conclusion that Suffolk had committed a material breach by depriving [the subcontractor] of its sole contractual remedy, thereby precluding Suffolk from invoking the no-damages-for-delay clause as a bar to [the subcontractor’s] claim for damages.”[3]

Of particular relevance given the recent Florida decision, was a seemingly gratuitous footnote in which the Massachusetts Appeals Court recognized that while No-Damages-For-Delay clauses are, “as a general proposition enforceable” in Massachusetts, “[a]t the same time, courts in various jurisdictions have recognized a number of exceptions to the enforceability of such clauses [such as] instances of fraud, misrepresentation, bad faith, and ‘active interference.’”).[4]  The recent Florida decision may be a good example of “active interference.”

Though no damages for delay clauses generally are enforceable, these cases demonstrate there are potential defenses to enforcement.

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[1] Berkley Insurance Company v. Suffolk Construction Co., 19-23059-CV-WILLIAMS.

[2] 91 Mass.App.Ct. 231 (2017).

[3] Id. at 237.

[4] Id. at fn. 7.